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Cash-Back Bank Accounts Hit Mainstream With Discover

NEW YORK (TheStreet) -- Cash-back credit cards are a common and widely used tool in the financial consumer's arsenal. But cash-back bank accounts?

Discover (DFS) may be the biggest name in this growing field. It has a brand-new Cashback Checking account that pays customers back 10 cents per debit card purchase, for paying a bill online and even for simply writing a check. The bank adds the 10 cents back automatically to the customer's checking balance after the transaction.

The account comes with some other, more traditional features, including no monthly fees and no minimum balance requirements, but it's the cash-back feature that makes it so interesting.

The option is available to only a limited number of Discover customers now, but the bank says a full rollout is scheduled for next year.

"Our goal for Discover Cashback Checking is to provide customers with the best value, service and rewards in the industry," says Roger Hochschild, Discover's president and chief operating officer. "We combined what customers most want in a checking account with the latest technology to provide a truly breakthrough product."

Breakthrough product? As far as checking accounts go, a cash-back account may actually qualify. Few banks have them -- Perkstreet Financial comes to mind, and some credit unions, such as Randolph Brooks Federal Credit Union Technology providers such as PayPal and Google (GOOG) have entered the sector as well, with mobile payments and mobile wallets.

Banks are turning to cash-back accounts to attract customers beaten down by basement-level interest rates, but there's another reason: While banks rarely earn a profit from checking account programs, they do earn money on accounts such as a retirement fund or a money market account. That's why financial institutions consider checking accounts "gateway" products -- they lead consumers to other, more profitable, bank programs.

Is a cash-back checking account a good idea for consumers?

Maybe, especially if you tend to use your debit card as your primary means of making a purchase and use online bill payment a lot. Bank consumers with subpar credit scores may also benefit, since those customers may not qualify for a cash-back credit card. Small-business owners who rely on their debit card to make purchases may also want to give cash-back accounts a closer look.

Just remember: You're not going to get rich with one. The Discover model is a good example of that, since you'd have to make 200 transactions to get back $20 per month.